North Carolina Tax Fairness Act Calculator

The North Carolina Tax Fairness Act makes a variety of changes to the state's tax code. The personal income tax will be gradually changed from progressive structure with a top rate of 7.75% to a flat rate of 4.5%. This is accompanied by a shift in the definition of state taxable income (currently based on federal taxable income) to being based on federal adjusted gross income, so that federal personal exemptions, the federal standard deduction, and federal Schedule A itemized deductions don't affect state taxable income. This is compensated for by the introduction of a large 0% rate bracket whose upper bound differs with filing status.

On the sales tax side, the current combined state and average local rate of 6.87% will be reduced by a quarter of a percentage point. However, the sales tax base will be broadened significantly and apply to nearly all goods and services. Business-to-business transactions are exempt from sales tax to avoid tax pyramiding.

This calculator estimates how changes to the state income and sales taxes as part of the North Carolina Tax Fairness Act will affect taxpayers in that state. (It does not attempt to estimate the effects of other changes included in the bill, such as to the estate tax, corporate income tax, or franchise tax.) To use the calculator, simply enter your household income, number of dependents, and filing status below. The calculator will then estimate your current North Carolina tax deductions and consumer spending for the year, or you can enter in your own values if you prefer. Finally, hit the "Calculate" button to receive year-by-year estimates.